Fiscal policy must complement monetary policy for growth to occur – Dr. Asuming

As the Monetary Policy Committee (MPC) of the Bank of Ghana (BoG) prepares to meet later this month to deliberate on the country’s policy rate, economist, Dr. Patrick Asuming has underscored the need for a strong fiscal policy to complement monetary policy measures outline by government.

He is of the view that a sound monetary policy, without stable fiscal policy measures will derail efforts made at achieving economic stability as the country pursues an International Monetary Fund (IMF)programme.

He stated for example that a good fiscal policy could help stabilize prices and keep inflation at a reasonable level.

“The MPC has at several points indicated that they expect the fiscal consolidation to pick up some of the slack in terms of dealing with the challenges with the macroeconomic stability”, he said.

Dr. Asuming stressed that enhancing fiscal stability is a major anchor that will ensure monetary policy gains.

He added that the two policies are required to work in tandem to propel productivity and economic growth.

He point out that government can achieve the feat by sticking to its budgetary plans not to overspend.

“Now that a new budget has been passed and now that it looks like they are making progress towards the IMF programme, they might feel that the fiscal consolidation might handle some of the difficulties that we have had”, he said.

He explained that as the country awaits an IMF programme, a sound fiscal policy will also send good signals to investors.